Expat run illegal businesses face axe in Saudi Arabia as the Ministry of Labour takes measures to combat tasattur or “cover-up businesses”, according to a latest report in the Saudi Gazette newspaper.
According to the Ministry, the move would affect over 1, 20,000 commercial businesses in Jeddah alone. Businesses will be given a grace period to legalise their labour practices but the move is part of wider bid by Saudi officials to reduce the level of unemployment among nationals and force firms to hire more Saudi workers, the report said.
Cover up businesses, tasattur in Arabic, are companies which are registered under the name of a national, but are in fact mostly financed and run by an expatriate. An earlier report by EUROCHAMBRE estimated the total number of such businesses to be well above 2,50,000 across the region, almost one-third of total Gulf SMEs.
These businesses have come into being because specific sectors are officially barred to foreign investors, or at least require minimum investment levels that smaller expatriate entrepreneurs cannot afford. The practice not being formally recognised, there are no official statistics about it, but it is estimated that the total number of tasattur businesses could amount to almost one-third of total Gulf SMEs, said Eurochambre.
The key fallout of such businesses is that they make it tougher for real national entrepreneurs to compete in markets that are dominated by the practice.
The move to combat such ventures is part of the ministry?s 10-point program for the employment of Saudi youth and targets a sector in which 85 percent of jobs are taken by guest workers, according to the Saudi Gazette.
?Shops, stores and outlets operating under tasattur are rife across the country, and many guest workers have expanded their tasattur businesses by bringing in relatives, thereby depriving Saudi nationals of their right to work in their own country,? the report said, quoting a source.
Under the measures, small commercial businesses which previously required only municipality licenses to operate will now have to obtain the same chamber of commerce commercial registers as required of larger operations. Dedicated departments will be set up at chambers of commerce to ensure compliance and specific sectors at the Ministry of Interior will also be involved in the anti-tasattur fight.
The authorities will, however, allow a period of grace for businesses to legalise their status and meet Saudization ? or ?nationalization? in the new parlance of the ministry requirements.
Source: Saudi Gazette, EUROCHAMBRES